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Declines for Custom Home Building




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NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building gained market share during recent quarters but experienced a drop for construction starts.

There were 49,000 total custom building starts during the second quarter of the year. This marks almost an 8% decline compared to the second quarter of 2022, consisting with weakness experienced throughout the home building sector. Over the last four quarters, custom housing starts totaled a solid 189,000 homes, a 7% decline compared to the prior four quarter total (204,000).

After market share declines due to a rise in spec building in the wake of the pandemic, the market share for custom homes has increased. As measured on a one-year moving average, the market share of custom home building, in terms of total single-family starts, has increased to 21%. However, this is down from a prior cycle peak of 31.5% set during the second quarter of 2009.

Note that this definition of custom home building does not include homes intended for sale, so the analysis in this post uses a narrow definition of the sector. It represents home construction undertaken on a contract basis for which the builder does not hold tax basis in the structure during construction.



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